Governor Mary Fallin today signed into law a landmark income tax reduction bill. House Bill 2032 would cut the top income tax rate from 5.25 percent to 5.0 percent on January 1, 2015. It would cut the rate further, to 4.85 percent, in 2016. Once fully realized, the tax cut would pump $237 million into the private sector.
Fallin said the income tax cut was an important tool for job creation and economic development.
"One of the first questions I get when I am talking to business owners throughout the country is, "if I come to Oklahoma, are you going to raise my taxes?'" Fallin said. "Passing a significant and responsible tax cut will help us to recruit these businesses and retain the ones we already have. Our tax cut will ultimately lead to more job opportunities for all Oklahomans."
Fallin also said the tax cut will help to offset recent tax hikes enacted by the federal government.
"Oklahomans have already seen their paychecks decrease, beginning in January of this year, thanks to Washington's tax hikes," Fallin said. "Cutting our state income tax will help to offset that loss, and help working Oklahomans keep more of their hard-earned money."
The second cut, bringing the rate to 4.85 percent in 2016, is contingent on total revenue growth in FY 2016 being equal to or greater than the fiscal impact of a 0.15 percent tax cut. Fallin said including that language in the bill ensures that Oklahoma does not lose the revenue it needs to fund key government services.
"We want to cut taxes responsibly," Fallin said. "No one wants to starve state government of the resources it needs to fund priorities like education. The language of this tax cut bill was crafted in a way to ensure that we have enough growth revenue to pursue a significant tax cut."
Finally, the bill also provides for a total of $120 million to fund repairs to the Oklahoma State Capitol beginning this year.
"The State Capitol is the "People's House,' and it has been in disrepair for far too long," Fallin said. "Getting the funds to repair this building in the same day we sign a tax cut into law is a victory for the people of Oklahoma."
Speaker Shannon and Pro Tem Bingman, co-authors of HB 2032, said income tax cuts will boost the economy.
"The way you grow an economy is by letting hard working people keep more of their hard earned money," said Shannon, R-Lawton. "Oklahoma has proven this conservative principle to be true over the past 15 years. By lowering the income tax rate, we are attracting skilled and educated workers to our state and making Oklahoma a leader in business and economic growth."
Bingman, R-Sapulpa, said, "This is the right time to responsibly reduce the tax burden on Oklahoma families. Businesses in the private sector are looking for certainty in this economy especially with so much uncertainty coming from our nation's capital. By passing a tax cut now, the state of Oklahoma is sending a clear signal to businesses around the country looking to expand or relocate. We're committed to lower taxes, to limited government, and we are open for business."